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A Cold California

This article originally appeared in the Winter 2020 Issue of Thinking Minnesota, now the second largest magazine in Minnesota. To receive a free trial issue send your name and address to info@americanexperiment.org.

Frustrated by his inability to persuade Congress to enact sweeping “cap and trade” laws to reduce greenhouse gas emissions, President Barack Obama simply bypassed the legislative branch of government. He used administrative bureaucracy, particularly the Environmental Protection Agency (EPA), to force additional regulations on the American people.

It appears Governor Tim Walz is now taking. a page out of the Obama playbook.

After last year’s legislature decisively dispatched Walz’s proposal to address greenhouse gas emissions through a whopping 20-cent per gallon gas tax increase, the Governor has turned his attention to avoiding public scrutiny by circumventing the legislature. Using the bureaucratic rule making process within the Minnesota Pollution Control Agency (MPCA), Walz is now attempting to adopt divisive regulations crafted by the California Air Resources Board (CARB) by requiring the use of low emissions vehicles (LEVs) and zero emissions vehicles (ZEVs) in Minnesota through administrative rule.

The “problem” for Walz—and other Big Government politicians—is that gas tax increases are completely transparent, and thereby deeply unpopular.

For example, Walz’s gas tax proposal—which would have raised Minnesota’s gas tax by 70 percent and caused the state’s gas tax to increase from 28th-highest in the country to the 4th highest—was immediately unpopular, even among many of the same people who had cast their ballots for the Governor just months before.

The Thinking Minnesota Poll revealed that 60 percent of Minnesotans opposed the gas tax increase, including 59 percent of those who identify politically as independent. American Experiment’s billboard and petition campaign, “Say No to a 70 Percent Increase in the Gas Tax,” harvested more than 2,500 signatures, and was a leading force behind the zero increase in Minnesota’s gas tax.

In contrast to transparent gas taxes, bureaucracies are hopelessly opaque. Witness the fact that Minnesota’s State Auditor found no one at fault for the “unorthodox and unauthorized” billing procedures that led to more than $100 million in incorrect overpayments over the last several years at the Department of Human Services.

Not only are the agencies opaque, but the consequences of their rules and regulations invariably fall beneath the radar of average Minnesotans. Minnesotans are burdened by the effects of new regulations, but they seldom take the time to connect the dots to clearly understand their causes.

Walz’s intent to mandate these regulations via executive order highlights a depressing reality: the gears of the administrative state are constantly churning toward an ever-larger and more intrusive government.

Gubernatorial Greenstanding

While Walz claims these regulations would “make sure there was still ice on the lake in January” and would be a win for consumer choice, Minnesota families, and the environment, the facts suggest that his proposed regulations are a solution in search of a problem. In reality, his “solution” will have little or no impact on the environment, but it will increase costs for consumers—especially low-income families and minority communities.

American Experiment submitted comments spanning 8,700 words and 27 pages to MPCA explaining why Walz’s proposed rules are bad for Minnesotans. The article below is a synopsis of these comments.

What’s in the Rules

It’s important first to understandWalz’s agenda.

The LEV standard would require every new passenger vehicle sold in Minnesota to meet the greenhouse gas (GHG) and other air pollutant emissions regulations established by California, according to MPCA documents. These standards would get more stringent every year, and are likely to be stricter than the regulations established by the federal government.

The ZEV standard would essentially be an electric vehicle (EV) mandate requiring manufacturers to stock a certain number of EVs based on a percentage of their vehicle sales in the state.

In the end, the LEV and ZEV rules will cede control of auto emissions in Minnesota over to California, rather than relying on national standards. Since the federal Clean Air Act requires any state that wishes to adopt California’s standards to do so exactly, Minnesota has no flexibility within the rules to adopt Minnesota-specific changes to these expensive regulations.

The most concerning part of this entire process is that we don’t even know how strict California’s standards will be.

Driving Up Costs

Colorado was the most recent state to adopt both of California’s car mandates. The Colorado Auto Dealers Association (CADA) found that the LEV standards would have a net cost to consumers of $2 billion, after accounting for fuel savings, and increase consumer costs for vehicles between $1,200 and $2,800 per car as a result of higher up-front sticker prices, insurance payments, financing charges, etc. These LEVs are unlikely to ever produce a cost savings for consumers, according to CADA’s analysis.

“In a state where consumers demonstrate a preference for trucks than for cars…consumers will see cost benefits of the regulation in the eleventh year of vehicle ownership for a truck purchased at the end of the regulation timeframe. A truck purchased near the beginning of the regulation timeframe will not offer consumers a cost benefit of regulation over the reasonable life of the vehicle.”

The average car in Minnesota lasts for 11.8 years, according to the industry trade group Auto Alliance, but the average new-car buyer only owns his or her vehicle for 71 months, or about six years. The odds these regulations will produce net benefits are tenuous, at best, and the small benefits that may occur will seldom be realized by the car’s original buyer. Mandating ZEVs will also increase prices for traditional gasoline-powered cars because EVs are unprofitable and will remain so into the next decade, according to General Motors. This is true even after EV buyers cash in on $7,500 in federal tax subsidies. As a result, auto manufacturers must increase prices on traditional vehicles to make up for losses they incur on EVs, driving up costs for everyone, according to estimates from the American Energy Alliance.

Mandating Electric Cars? In Minnesota?

It may come as a surprise to people living outside of Minneapolis and St. Paul, but 99 percent of the cars sold in Minnesota are not electric (EVs accounted for 0.74 percent of all new vehicle sales in 2018). This is largely because electric cars are more expensive and less useful than gasoline-powered cars.

EVs = Electric Vehicles or Expensive Vehicles? Both.

Even after subsidies, electric cars are more expensive than their gasoline-powered counterparts. For example, the Chevy Bolt (an electric vehicle) retails for $36,620 while the Chevy Malibu retails for $22,095. The up-front sticker price difference is substantial, and a newly-released study from the Massachusetts Institute of Technology (MIT) found EVs are unlikely to be cost competitive with traditional vehicles in the next decade, even after factoring in lower fuel and maintenance costs.

Studies by EV advocates claim EVs could potentially achieve price parity with traditional vehicles within the next five years. However, MIT explains that the steady decline in the cost of lithium-ion batteries, which power EVs and account for about a third of their total cost, is likely to slow in the next few years as they approach the limits set by the cost of the raw materials.

“If you follow some of these other projections, you basically end up with the cost of batteries being less than the ingredients required to make it,” says Randall Field, executive director of the Mobility of the Future group at MIT.“We see that as a flaw.”

So do we. In reality, EVs are a long way from competing with gasoline and diesel-powered cars.

Reduced Reliability

Even if cost were not an obstacle to buying EVs, their reliability issues would be. EVs suffer from greatly reduced range during Minnesota winters.

According to testing conducted by the American Automobile Association (AAA), electric cars lose 30 to 50 percent of their range while using the heater when the temperature is 20 degrees Fahrenheit. It often gets much colder than this in Minnesota, causing battery range to diminish to an even greater extent. Batteries also take longer to charge during periods of cold weather.

Reduced range in winter is an enormous obstacle to Expensive Vehicle adoption in Minnesota. For example, someone who grew up in Moorhead but moved to Minneapolis would likely have to charge his EV at least once if he was to travel home to visit relatives during optimal conditions. Charging would increase the drive time from 3.5 hours to closer to four hours, if not longer. During colder winter months, the number of times the EV driver would have to stop and charge his or her car would increase by two or three times, potentially lengthening the trip to more than five hours because of greatly-diminished range.

Requiring auto dealers to stock cars that are more expensive and less useful than their gasoline-powered counterparts is a gross infringement on their private property rights. Private businesses should be able offer the cars that best cater to the needs of their customers, not be forced to offer inferior products. Walz’s proposed mandates also show that his administration is more concerned about appearing virtuous than containing consumer costs.

Negative Impacts on Low-Income Households

Speaking of virtue signaling, the Walz administration is doing plenty of that in its proposed rulemaking. For example, MPCA states that “reducing air pollution from vehicles is especially critical for addressing environmental justice,” and MPCA is especially interested in learning how the rules will impact communities of color and low-income communities.

MPCA may pay lip service to caring about the impacts of its rules on low-income communities, but the inescapable effect of these regulations will be to harm these communities by making it more expensive for people to access private transportation and the economic opportunities it provides.

Top civil rights leaders have taken note of this and are suing the California Air Resources Board—the very institution the Walz administration wants to put in charge of setting fuel standards for Minnesota—for climate policies they say disproportionately harm low-income residents, particularly Latinos and African Americans.

“California politicians are using anti-racist and environmentalist words to hide the regressive impact of their climate policies on the poor and people of color,” said John Gamboa, the co-founder of The Two Hundred, a coalition of prominent civil rights leaders leading the legal charge against CARB.

George Lefcoe, a professor of law at the University of Southern California, said the lawsuits challenging CARB’s transportation policies are particularly powerful. “Automobiles are the survival mechanism for low-income people,” Lefcoe noted.

“If you try to increase the cost of automobiles, you hurt low-income people.”

If low-income communities will be harmed, who will benefit?

Research from Morgan State University suggests white, wealthy liberals. EV owners are predominately white males who are more educated, affluent, older, and more environmentally focused than owners of traditional cars. Electric vehicles are more popular among Democrats and least popular among those not interested in politics.

While Governor Walz’s proposed rules may improve his standing with urban elites in St. Paul, they will do little to improve the environment.

No Measurable Benefits to the Environment

Governor Walz has crowed that these new regulations are a win for air quality and the climate, but the data show these regulations will have little impact on either of these metrics. One reason the Governor’s plan will do little to improve air quality in Minnesota is the fact that Minnesota’s cars are already clean.

Traditional Air Pollutants

According to the U.S. EPA, advances in technology like more-efficient engines, catalytic converters, and cleaner fuels have caused tailpipe emissions from cars to fall by 98 to 99 percent compared to the 1960s.

Our already-clean cars have contributed to the fact that Minnesota has some of the cleanest air in the world. In fact, MPCA data show our air already meets the most stringent state and federal standards for air quality, which are designed to protect even vulnerable populations like children and the elderly. Pollution from sulfur dioxide, carbon monoxide, and nitrogen dioxide are especially low.

While detecting the impact these regulations would have on traditional pollutants would be difficult, it would be impossible to measure their impact on future global temperatures.

Spending Billions, Averting 0.000052 Degrees Celsius by 2100

It’s curious the Governor stated these rules would “make sure there is still ice on the lakes in January,” and yet no one from his administration has produced an estimate of how much future global warming these rules would actually avert.We see this as a flaw.

According to a press release by the Walz administration, the California car regulations would reduce annual CO2emissions by 2 million tons per year. To the average person this may seem like a lot, but it is only about 1.3 percent of total state emissions as of 2016, according to the MPCA’s website. These reductions would reduce future global temperatures by 0.000052 degrees Celsius by 2100, an amount so small it is impossible to measure.

Conclusion

Walz ran on a “One Minnesota” platform, not a pledge to make Minnesota “One with California.”

If he wants to require auto dealers to put electric vehicles on their lots, why doesn’t he drive one? Maybe the Governor should be required to drive an electric car for both personal and state business during the duration of the rulemaking process. Such hands-on experience would be incredibly valuable to inform the rulemaking procedure.

Isaac Orr is a Policy Fellow at Center of the American Experiment and specializes in energy and environmental policy. 

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